NTB

The Bank of N.T. Butterfield & Son Ltd.

Finance/Real Estate, Event Driven/Special Sit


Presented:05/01/2018
Price:$48.20
Cap:$2.70B
Current Price:$38.35
Cap:$1.80B

Presented

Date05/01/2018
Price$48.20
Market Cap$2.70B
Ent Value$0.75B
P/E Ratio16.41x
Book Value$14.95
Div Yield3.14%
Shares O/S55.81M
Ave Daily Vol310,401
Short Int1.22%

Current

Price$38.35
Market Cap$1.80B
The Bank of N.T. Butterfield & Son Ltd. provides community banking and wealth management business. It operates through the following geographical segments: Bermuda, the Cayman Islands, Guernsey, The Bahamas, Switzerland, and the United Kingdom. The Bermuda and the Cayman Islands segment offers a range of retail and corporate banking services to individuals,local businesses, captive insurers, reinsurance companies, trust companies, and hedge funds. The Guernsey, The Bahamas, and Switzerland Bank segment provides wealth management only. The United Kingdom segment gives wealth management to high net worth and ultra-high net worth individuals, family offices, and institutional and corporate clients. It also provides residential property lending services. The company was founded in 1858 and is headquartered in Hamilton, Bermuda.

Publicly traded companies mentioned herein: Bank of Hawaii Corp (BOH), Bank of NT Butterfield & Son Ltd/The (NTB), Broadcom Inc (AVGO), Deutsche Bank AG (DB), HSBC Holdings PLC (HSBC)

Highlights

The presenter is long shares of Bank of NT Butterfield & Son (NTB), which is an established Bermuda bank that has been growing its market share in Cayman and Guernsey, among other remote markets such as Jersey. NTB has pricing power in its local markets, relatively low loan exposure, and is in a position to be “the Avago of banks" given the management team's commitment to disciplined growth via acquisitions (as evidenced by its recent transactions with Deutsche Bank). At $48, the stock trades at ~11x forward Street EPS estimates, a two-turn discount to most regional US banks; and a four-turn discount to Bank of Hawaii. He attributes the discount to unwarranted fear of nefarious activity and/ or lax compliance, and thinks patient shareholders could see meaningful gains over the next 12 - 24 months as the contributions from recent deals and an improved interest rate environment flow through NTB’s financial statements (i.e., positive results should lead to multiple expansion).

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Idea Discussion

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